Yonghe King, a well-known Chinese-style fast food chain, on February 24 announced plans to open around 1,000 new restaurants in China in the coming seven years with the financial support from the Jollibee Foods Corporation (JFC), the biggest fast food company in the Philippines.
The two parties signed a co-operative agreement on February 24 in Shanghai, under which Jollibee will pay US$22.5 million to buy 85 per cent of Belmont Enterprise Ventures Ltd, the holding company of Yonghe King, which now has opened more than 80 chain stores in 10 Chinese cities.
"We expect to first increase the number of chain stores from 300 to 500 in three to five years," said Yonghe King President Steven Lin, one of the company's founders. "Thereafter, Yonghe King's expansion will be further accelerated, with its total outlet number hitting 1,000 within seven years from now."
Yonghe King will benefit from Jollibee's strong financial situation and better store management practices, which have overshadowed McDonald's to become the most popular fast food chain in the Philippines, said Michelle Lee, another founder of Yonghe King.
Jollibee outnumbered McDonald's by a ratio of 2:1 in the Philippines, with a total of 988 outlets (33 overseas) by the end of 2003, according to company statistics.
Meanwhile, the Philippine company reported a net profit of US$22.42 million last year, with a total cash assets of US$48.6 million on hand by the end of 2003.
Jollibee President Tony Tan Caktiong on February 24 noted that his group will fully support Yonghe King's expansion in China in the coming years as a major step to share in the fast growth of the Chinese market.
"Our current strategy in China is to contribute to make Yonghe King an even bigger brand, hopefully the world's No 1 Chinese-style fast food brand in the future," said Tan.
Jollibee will help refine the management of Yonghe King by emphasizing its tasty food, affordable prices, delightful environment and satisfactory service, which have been summed up as the secrets behind Jollibee's success in the Philippines, according to Tan.
But industry analysts point out that the Chinese market is something different from what it is in the Philippines, and there may be difficulties copying the Jollibee models from Manila to Shanghai, where Yonghe King's headquarters is based.
Jollibee opened a store in Xiamen in East China's Fujian Province in 1998, but the only Chinese store there was closed after failing to adjust to the local market as the company had expected.
Tan denied plans yesterday to reopen Jollibee stores in China or bring other Jollibee food brands onto the Chinese mainland in the near future.
Established in 1975, Jollibee has grown into an international food giant, with fast food brands like Jollibee (chicken and burgers), Chow King (Chinese fast food) and Greenwich (pizza and pasta) and worldwide sales of US$516 million in 2003.
Yonghe King was founded in Shanghai by Taiwanese investors in 1995, and now it has more than 30 restaurants in the city.
